NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
least 30% of the voting rights in the general meeting of a Dutch company listed on a regulated market (alone or together with others with whom the bidder is act- ing in concert). A bidder meeting these requirements will be obliged to make a mandatory offer. “Acting in concert” is defined as persons co-operating under an (oral or written) agreement with the aim of acquiring control in the target company. Unfortunately, guidance on when persons are acting in concert is limited. Contrary to other EU jurisdic- tions where similar mandatory offer rules apply, there is no possibility to obtain guidance from any regula- tory authority, since in the Netherlands a Dutch court will ensure compliance with the mandatory offer rules and not the AFM. A mandatory offer should be made at a fair price that will, in principle, be equal to the highest price paid by the bidder for shares in the target in the one-year period preceding the announcement of the manda- tory offer. 6.3 Transaction Structures For an acquisition of a public company in the Neth- erlands, most transactions are structured as a public offer or a takeover bid. The bidder is required to make a public announcement about its intention to acquire the target company according to Dutch corporate law. In most of these transactions, the purchase price is entirely paid in cash. Payment in either securities or a mixed form of cash and securities is also possible. However, less commonly, a takeover may take the form of a legal merger whereby either both compa- nies merge into a new entity, or one company absorbs into the other. 6.4 Consideration and Minimum Price In most Dutch public company acquisitions in the technology industry, cash is solely used as consid- eration. However, it is also possible to offer securities or a combination of cash and securities. Only in case of a mandatory offer do (minimum) price rules apply. A mandatory offer should be made at a fair price that will, in principle, be equal to the high- est price paid by the bidder for shares in the target
in the one-year period preceding the announcement of the mandatory offer. In the context of private tech M&A transactions with high valuation uncertainty, the authors frequently encounter contingent value rights such as earn-out mechanisms granted to VC inves- tors to bridge value gaps between the parties. These types of structures are not seen in the context of pub- lic M&A. 6.5 Common Conditions for a Takeover Offer/ Tender Offer A public offer is usually subject to “commencement conditions”, being conditions that must be satisfied (or waived) for the bidder to launch the offer, and “offer conditions”, being conditions that must be satisfied (or waived) in order to declare the offer unconditional. Common commencement conditions include: • no breach of the (material provisions of the) merger protocol; • absence of a material adverse change; • no change in the board’s recommendation; • compliance with employee consultation proce- dures; • no legal prohibition of the public offer; and/or • no suspension of trading of the target company’s shares. Similar conditions typically apply as offer conditions. In addition, the following conditions generally apply: • all regulatory approvals have been obtained; and • a certain minimum acceptance threshold has been met. Finally, the adoption of certain general meeting resolu- tions (eg, dismissal or appointment of directors) that will become effective upon settlement of the offer is generally included as an offer condition. In contrast to a voluntary public offer, the completion of a manda- tory offer may not be made subject to any conditions. 6.6 Deal Documentation In the context of a takeover offer, although not statu- torily mandated, it is customary in the Netherlands to outline the terms and conditions of a tender offer in a merger protocol. In a merger protocol, the target com-
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